You may be able to save your home and/or buy valuable time by filing Chapter 13 bankruptcy. For Dallas residents, foreclosures are less of a problem than in other parts of the country, but if you lose your job or suffer some unexpected bill, filing bankruptcy can help. This guide briefs you on the basics of filing Chapter 13.
You’re Not Eligible
The Texas state median income defines the means test for Chapter 7 bankruptcy. If you make too much money, you may not be eligible for Chapter 7. This is not always bad; Chapter 13 offers more protection in secured debts, and you get more time to pay off bills. If you make more than the following, you may have to consider Chapter 13.
1 person: $38,801
2 person family: $55,660
3 person family: $59,011
4 person family: $66,145
More allowed income if you have a larger family.
You Owe Secured Debts
If you owe a lot of secured debt, you have much better protection with Chapter 13 bankruptcy. Say for example you live in Dallas and you want to file bankruptcy because of a major debt, but this debt is a credit or medical. These are unsecured debts. If you are eligible, Chapter 7 may be better. If you make too much money, Chapter 13 allows you to make payments over a more manageable period of time. You typically get 3-5 years, where a lot can change (such as getting a new or better job), allowing you to pay on debts.
Say you own a Dallas home, but your spouse loses his job and you start falling behind on mortgage payments. Where you may think the homestead exemption protects you – which we’ll be going over – remember that it does not protect you from the mortgage lender. Chapter 13 bankruptcy, on the other hand, can stop a foreclosure if you file correctly.
If you file too late, if you wait until the foreclosure process has started, a Chapter 13 bankruptcy may be pointless. Timing is everything when you’re considering bankruptcy to stop a foreclosure. So, if you stop making payments, act quickly. Start considering bankruptcy.
Understand the Homestead Exemption
As noted, you do have some protections with the homestead exemption, namely from creditors. However, it does not stop the lender from taking the home. That makes filing Chapter 13 bankruptcy to protect your Dallas home even more valuable. If you own a home in the city, worth $150,000, something you and your family have lived in for years, losing it can be life changing. Therefore, consider protecting yourself with a Chapter 13 bankruptcy.
Get Legal Help
Finally, you need a lawyer 100% of the time when considering Dallas bankruptcy. He or she can explain in more detail how the homestead exemption works, when to file for bankruptcy, if you should file Chapter 7, and when Chapter 13 is best. Legal help is necessary, and it won’t cost you a fortune. If you cannot hire a lawyer, you risk filing incorrectly and losing far more. Negotiate, get a loan, do whatever you can to hire an experienced lawyer. The benefits of bankruptcy far outweigh the fees.